Compensation plan for members of the Managing Board

Managing Board compensation takes into account the importance of the Group and the responsibility that goes with it, the economic situation of the Company, and the market environment.

The variable portion of the compensation emphasises the need for sustainability in a number of ways; achieving sustainability depends to a large extent on satisfying performance criteria that extend beyond a single financial year.

The performance-related portion of the remuneration has an upper limit and accounts for approximately 40% of the possible total income. The awarding of such compensation presupposes that consideration has been given to the sustainable development of the Company and the Group. The Managing Board is not entitled to the performance-related component of compensation if performance fails to meet certain thresholds.

In 2011, the key performance criteria for variable compensation are the combined ratio and the profit before taxes for the years 2011 and 2012. Even if the performance target is met in a financial year, because of the focus on sustainability, the full variable compensation is only awarded if satisfactory performance is also reported in the following year.

Managing Board compensation does not include stock options or similar instruments.

After waiving their 2009 and 2010 bonuses for the respecting previous years (in spite of good results) in recognition of the difficult situation faced by customers and employees, the Managing Board was granted a bonus in 2011.

The standard employment contract for a member of the Vienna Insurance Group Managing Board includes a pension equal to a maximum of 40% of the measurement basis if the member remains on the Managing Board until the age of 65 (the measurement basis is equal to the standard fixed salary). The rules for Managing Board members with many years of prior service differ in that the percentage of the measurement basis is higher for historical reasons (up to 55%), and additional amounts are awarded for remaining on the Managing Board at the Supervisory Board’s request after the age limit has been reached.

A pension is normally received only if a Managing Board member’s position is not extended and the member is not at fault for the lack of extension, or the Managing Board member retires due to illness or age.

In cases where the provisions of the Austrian Employee and Self-Employment Provisions Act (Mitarbeiter- und Selbstständigen-Vorsorgegesetz) are not applicable by law, Vienna Insurance Group Managing Board contracts provide for a severance payment entitlement structured in accordance with the provisions of the Austrian Employee Act (Angestelltengesetz), as amended in 2003, in combination with applicable sector-specific provisions. This allows Managing Board members to receive a severance payment equal to two to twelve months’ compensation, depending on the period of service, with a supplement of 50% if the member retires or leaves after a long-term illness. A Managing Board member who leaves of his or her own volition before retirement is possible, or leaves due to a fault of his or her own, is not entitled to a severance payment.

Compensation plan for the members of the Supervisory Board

In accordance with resolutions adopted by the 16th Annual General Meeting on 25 May 2007, the members of the Supervisory Board elected by the General Meeting are entitled to receive compensation in the form of a payment remitted monthly in advance. Members of the Supervisory Board who withdraw from their positions before the end of a month still receive full compensation for the month in question. In addition to this compensation, Supervisory Board members are entitled to receive an attendance allowance for participating in Supervisory Board meetings and Supervisory Board committee meetings (remitted after participation in the meeting). The total compensation paid to members of the Supervisory Board in 2011 was EUR 365,000 (2010: EUR 351,000).